Keep Expectations Modest for Iraq’s New Government

“Iraq is like a race car that has been neglected and repeatedly wrecked. Al-Kadhimi is not the race car driver. He’s the tow truck driver.” This is how Yazan al-Jabouri describes the task ahead for Iraq’s new prime minister. And it makes clear the need for all observers to take an appetite suppressant, as it were, when judging the potential — and eventually the accomplishments — of the new Iraqi government. The electoral results of 2018 still govern the universe of possible outcomes, none of which are favorable to major reform. Iraq is still a “race car” with immense potential (human capital, educational institutions, oil, rivers, fertile land, access to the sea, road networks), as anyone who visits sees clearly. But the world should expect little from this prime minister, other than setting conditions for the next prime minister’s success.

More than six months since the resignation of Prime Minister Adel Abdul Mahdi, and after failures to form a government by two previous prime minister-designates, Iraq’s parliament confirmed the majority of Iraq’s proposed ministers early in the morning of May 7, 2020. Mustafa al-Kadhimi, a former journalist and human rights activist turned spymaster, was sworn in as Iraq’s latest prime minister. Once again, Iraq has executed a peaceful transition of power, an accomplishment that — despite all the necessary caveats — must be noted and applauded. Furthermore, this transition is particularly notable as the resignation of Abdul Mahdi was caused by nationalist demonstrators. The Iraqi political system — for all its very real flaws — was able to react to this resignation in a way that appears to have modest approval from some (though by no means all) factions of the demonstrators. Finally, this government was formed in the shadow of incredible tension between Iraq’s two most important patrons: the United States and Iran. The Iraqi political system seems to have walked the tightrope to arrive at a solution that appears acceptable to both.

There is great excitement in the West about al-Kadhimi. As an activist, journalist, and British citizen, he is widely characterized as being “close” to the United States, by friends and enemies alike. However, expectations of what al-Kadhimi is able to accomplish should be extremely limited, for at least three reasons. First, Iraq has an accumulation of difficult and intertwined issues from its history — 1980, 1990, 2003, 2014 — and this government has only two years before scheduled elections; the hope of early elections further truncates its tenure. Second, the election of 2018 diffused power in a way not previously seen in Iraq, at least among the Arab parties, both Sunni and Shia. Finally, the twin crises of COVID-19 and the associated oil shock, bringing a dramatic financial crisis to Iraq, will occupy virtually all this government’s time and energy.

Iraq’s historical situation is familiar but bears repeating. Iraq has hardly known a moment’s peace in the past forty years. The 1980–1988 Iran-Iraq war was followed in 1990 by the Gulf War, and then the long years of U.N. sanctions that followed. These sanctions led into the 2003 U.S. invasion and occupation, and then barely two years passed between the end of occupation and the 2014 beginning of the ISIL crisis in Iraq.

These events cast a long shadow over Iraq, each bringing its own set of problems that intertwine with the next. The Iran-Iraq war saw — in the Badr Brigade — the first Iraqi armed group to put Iranian ideological interests over Iraqi nationalist ones. Sanctions saw the emergence of corruption in Iraqi society — as a previously efficient (albeit authoritarian) bureaucracy and judiciary was forced to choose between principle and feeding their families. The effect of occupation — emergence of more militias, decimation of remaining infrastructure, dissolving of functional institutions — is well documented. And finally, ISIL further destroyed both infrastructure and social fabric in large portions of Iraqi society — among the Yezidi, Shia Turkomen, and Christians, more than most. Nor can the effect on the Arab Sunni communities that ISIL “governed” be underestimated. (Excepting the cadets at Camp Speicher, few Arab Shia encountered ISIL.) Finally, the Hashd, or popular mobilization forces, that rushed to the front to fight ISIL now refuse to be more than nominally integrated into Iraqi government structures, leading to fears of a parallel state.

These historical problems remain the most pressing long-term challenges in Iraq. It is difficult to see a promising future for an Iraq that cannot address these critical issues: infrastructure, corruption, and militias. However, it will not be this prime minister — or at least not in this abbreviated term — who can tackle these deep and systematic crises. The problems are too deep, al-Kadhimi’s political capital too limited, and his tenure too short. The solutions to these three critical issues are largely generational, and will require a long, focused effort to be tackled head-on.

This does not mean that al-Kadhimi cannot nibble around the edges of these problems, so to speak. He could begin to engage with the pledges made at the 2018 Kuwait conference on Iraq’s reconstruction to begin long-term rehabilitation of infrastructure, particularly power and water. He can put measures into place to stop the low-level corruption that so harasses Iraqi citizens daily. He can try to keep the Hashd from further infiltrating Iraq institutions. He can even push for modest reforms that would limit the stranglehold that petty regulation has on Iraqi entrepreneurs. But again, expectations should be quite modest.

Mustafa al-Kadhimi, activist, journalist, then head of Iraq’s intelligence services, is a most interesting prime minister. But like his predecessor, he was selected by — and essentially serves at the pleasure of — the political blocs in the Iraqi parliament. Al-Kadhimi has no political bloc and controls no votes in parliament. This is in stark contrast to the situation enjoyed by Prime Minister Nouri al-Maliki in 2006–2014, and especially in his second term. Even Haider al-Abadi in 2014–2018 could control at least a large percentage of his Dawa Party base.

As such, this prime minister, like his immediate predecessor, does not have the power of earlier prime ministers with a large parliamentary bloc (in their cases, from the Dawa Party) backing them. Calls for him to take major, controversial policy steps, and especially those that might limit the Hashd, who are the second largest parliamentary constituency, are politically naïve. This is not to say that al-Kadhimi cannot exploit internal divisions inside the Hashd. It is hard to miss the disunity displayed by Iraqi Hezbollah (KH) attacking al-Kadhimi while the rest of Fatah — the Hashd-affiliated political party — backs him. But to take on the entire Hashd system is politically impossible for the prime minister.

To use a business metaphor, Nouri al-Maliki was both the “CEO” of Iraq and the plurality “shareholder,” with about 30 percent (individual members constantly shifted allegiances) of the parliamentary seats. Al-Kadhimi, on the other hand, like Abdul Mahdi before him, is essentially a “CEO” hired by the “board.” And who are the largest shareholders on this “board” that is the Iraqi government? The Sadrist Sairoon party and Fatah. Of course, al-Kadhimi was endorsed by the entire political class, minus the parties of (ironically) the two protagonists in the 2010 near-tie Iraqi election, Nouri al-Maliki and Ayad Allawi. This implies that the new prime minister was able to satisfy the expectations of his entire “board,” Sunni and Kurdish parties included.

Finally, particularly given the short tenure of this government, the prime minister and his cabinet need to remain laser-focused on two things — elections and crisis management. The crises to manage are primarily those related to COVID-19 and Iraq’s dire financial straits, but also the ever-lingering ISIL problem.

On the first count, the prime minister has promised “early” elections as part of his program. This will be very difficult to make happen in any real sense. Setting up elections in Iraq is a slow and onerous process at any time, and the reality of COVID-19 adds a further degree of difficulty. Nonetheless, the prime minister should attempt to schedule elections for November or December of 2021 (they would normally be expected between April and July of 2022). This date has the virtue of a) giving the government time to prepare, b) costing the existing power structure little, by leaving power only four-six months early, and c) giving a small win to the protesters, who can truthfully say they pushed elections into the preceding year. There are many important details still to be ironed out in the election law and political parties law that codify the election; close watch should be kept by major international organizations. No existing power brokers, in any country, will meekly agree to electoral rules changes that do not work to their advantage.

The financial crisis coming to Iraq is a flood of biblical proportions. Iraq’s baseline non-discretionary budget is estimated at $4 to 4.5 billion. In April 2019, Iraq’s oil revenues were a comfortable $7.1 billion, but this April those revenues tumbled to $1.4 billion. May’s revenues are projected to be even lower, due to both lower prices and OPEC+ production cuts that Iraq has promised to honor. In other words, at current levels, Iraq could be running a deficit in the neighborhood of $1.5 to 3.5 billion monthly.

The good news is that Western institutions have reacted well to the news of al-Kadhimi as prime minister, and his newly confirmed finance minister, Ali Allawi, is a highly respected technocrat who served as minister of finance in 2005–2006, in additional to earlier terms as minister of both defense and trade. So help from both Western governments and Western institutions — the World Bank and International Monetary Fund — can be expected. But getting through this crisis will require strict austerity measures that will be deeply politically unpopular — salary cuts, subsidy reductions, and perhaps a round of job eliminations. Job eliminations, in particular, will be particularly painful as they will be perceived (whether correctly or not) as having political overtones. In addition, Iraq will certainly have to draw down its currency reserves and may have to let the Iraqi dinar inflate against the dollar. All of these decisions will be incredibly painful for Iraq’s citizenry and therefore, by extension, Iraq’s political class.

On COVID-19, Iraq has done reasonably well by closing its borders and airports and imposing a fairly strict curfew. However, Iraq’s hospital system is severely lacking in capacity, and ventilators and other intensive treatments for those with severe cases will be difficult — if not impossible — to get, when the virus moves into the general population. The lack of first-tier health care is doubtless one of the reasons that several international oil companies (most notably Petronas) have left Iraq in whole or part. The exodus of international expertise, the need to continue social distancing, and the effect of travel and movement restrictions on Iraq’s very fragile small business community will further complicate al-Kadhimi’s two-year (ish) term.

While alarmist warnings about ISIL’s imminent return are mostly just that, the group is showing a small but significant increase in its capability to conduct harassment attacks. The coordinated attacks of the past few months do show an increase in command and control, as opposed to the post-Mosul banditry of ISIL’s scattered remnants. But should Iraq be unable to find the money to keep its forces in the field, then ISIL could continue to rebuild and regenerate. The social fabric in Iraq has changed sufficiently. It is highly unlikely that the group can ever again aspire to more than terrorism, but for Iraq to continue to stabilize, even that capability would be far too much.

Finally, in an almost parenthetical point, al-Kadhimi will have the opportunity to manage the U.S.-Iraq Strategic Dialogue next month. Led on the U.S. side by a career ambassador, Undersecretary of State David Hale, this forum will permit both an airing of differences, and a coordination mechanism for cooperation going forward. While it is generally clear what the United States wants out of the dialogue (revalidation of coalition troop presence, flare gas capture, and a better business climate for U.S. firms), it is not entirely clear what Iraq as a whole wants from its relationship with the United States. Al-Kadhimi has an opportunity to try to generate a consensus as to what Iraq wants its relationship with the United States to be. But while the United States can help with many of Iraq’s challenges, it can only do so on the margins. The days of America spending tens of billions of dollars on Iraq are emphatically over.

For all the reasons enumerated above, Iraq-watchers need to very much temper their expectations for the coming years. Iraq’s problems are deep and complex, even wicked. The prime minister has no political bloc of his own from which he can draw support when making hard choices. And just getting through the crises that are obviously on al-Kadhimi’s plate will likely consume the entirety of the government’s time and energy. The international community may be supportive, but there are very real limits on how they can assist, particularly as they manage their own COVID-19 situations. The hope of the international community needs to be put not on Prime Minister al-Kadhimi — as popular and promising as he may be — but instead on better electoral outcomes in 2022, and then in 2026 — both hopefully harnessing the energy of the protests that have characterized Iraq’s past eight months. If al-Kadhimi can, metaphorically, tow the race car to a place of repair, that will be an excellent outcome for his two-year term.

Douglas Ollivant, a former National Security Council Director for Iraq during the Bush and Obama administrations, is an ASU Senior Fellow in the Future of War project at New America. He is a managing partner of Mantid International, a strategic consulting firm with offices in Washington, Beirut, Baghdad, and Guam, and a senior editor at War on the Rocks. Mantid International advises clients working in Federal Iraq.